INCOME TAX

12 Months Ended

Dec. 31, 2021

INCOME TAX [Abstract]

INCOME TAX

NOTE 9. INCOME TAX

The Company’s net deferred tax assets at December 31, 2021 is as follows:

	December 31, 2021
Deferred tax assets
Net operating loss carryforward	$	31,111
Startup/Organization Expenses		149,455
Unrealized gain/loss - Trust		(2,137)
Total deferred tax assets		178,429
Valuation Allowance		(178,429	)
Deferred tax assets, net	$	—

The income tax provision for the period from February 4, 2021 (inception) through December 31, 2021 consists of the following:

	December 31, 2021
Federal
Current	$	—
Deferred		(178,429	)
State and Local
Current		—
Deferred		—
Change in valuation allowance		178,429
Income tax provision	$	—

As of December 31, 2021, the Company had $148,147 of U.S. federal net operating loss carryovers available to offset future taxable income. The net operating losses generated do not expire.

In assessing the realization of the deferred tax assets, management considers whether it is more likely than not that some portion of all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences representing net future deductible amounts become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. After consideration of all of the information available, management believes that significant uncertainty exists with respect to future realization of the deferred tax assets and has therefore established a full valuation allowance. For the period from February 4, 2021 (inception) through December 31, 2021, the change in the valuation allowance was $178,429.

A reconciliation of the federal income tax rate to the Company’s effective tax rate for the period from February 4, 2021 (inception) through December 31, 2021 is as follows:

	December 31, 2021
Statutory federal income tax rate		21.0	%
State taxes, net of federal tax benefit		0.0	%
Change in fair value of warrants		(28.5	)%
Change in fair value of over-allotment liability		(0.4	)%
Transaction costs		4.8	%
Meals and entertainment		0.0	%
Valuation allowance		3.1	%
Income tax provision		0.0	%

The Company’s effective tax rates for the periods presented differ from the expected (statutory) rates due to the recording of full valuation allowances on deferred tax assets and permanent differences.

The Company files income tax returns in the U.S. federal jurisdiction. The Company’s tax returns for the year ended December 31, 2021 remain open and subject to examination. The Company considers Tennessee to be a significant state tax jurisdiction.